SovEcon, citing “unimpressive” harvest yields, slashed its forecast for Russia’s wheat output by 2.9m tonnes, lowering the bar on estimates for the harvest, and raising doubts over export expectations too.
The influential analysis group cut to 73.7m tonnes its estimate for the wheat harvest in the world’s top exporter of the grain.
While still some 2m tonnes above last year’s result, that is well below the 76.6m tonnes that SovEcon had forecast at the start of this month, and below expectations from other commentators too.
The official Russian forecast is for a 75m-tonne harvest. The US Department of Agriculture estimates output at 74.2m tonnes excluding Crimea, which SovEcon sees as producing just short of 1.0m tonnes of wheat.
SovEcon cited behind its downgrade “low moisture reserves and unimpressive yields in all key winter wheat regions.
“A long period of dry weather in May-June in the European part of Russia” had wrought a “bigger effect on yields than we expected earlier”.
The comments come as the Russian harvest has reached 30.8m tonnes, as of Thursday, according to official data, from 8.2m hectares, with combining nearly finished in the important South region, but still in its early stages in Volga Valley.
The average yield is shown at 3.75 tonnes per hectare, compared with 3.84 tonnes per hectare as of the same date in 2018, from 7.2m hectares.
‘Lowest since 2015’
Still, Andrey Sizov, the SovEcon managing director, held out little hope of the Volga Valley result improving the final figure, saying that yield prospects appeared to be “even lower than in 2018, which was not a good year.
“In some regions, results are the lowest since 2015,” he told Agrimoney.
However, what did look like bolstering the final harvest result was a solid performance in spring wheat.
“We still expect yields in the Asian part of the country, which is the main producer of spring wheat, to be slightly above average,” SovEcon said.
Mr Sizov added that the lower harvest prospects “will have an effect” on Russia’s wheat export prospects for 2019-20, which SovEcon a month ago forecast at 37.6m tonnes.
While saying that the analysis group was still working on a revised figure, he heralded the potential for a big downgrade, saying that the US Department of Agriculture’s 34.5m-tonne forecast now “looks too optimistic”.
Russia in the July 1-18 period, the first 18 days of the country’s 2019-20 wheat marketing year, shipped 1.42m tonnes of grains overall, a 31% drop year on year.